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In Reply to: Why are theaters doing so well dispite DVDs and home theater? posted by TA on April 17, 2002 at 21:02:27:
attendance has been flat or slightly down. Ticket prices have been raised quite a bit over the past 1-2 years.I ran a 16 screen theatre here in Miami for AMC and my company hadn't made money in two and a half years--and we were actually in good shape, LOL. Many chains filed for bankruptcy during this period, but this was mainly due to overexpanding and in having to close down the smaller underperforming stores, like mine in January. The problem with theatres is that they're a 'single use' facility and the exhibitor is usually locked into a 20 year lease, so if business turns south, you're still on the hook for the rent.
I was paying $78k/month for rent/tax/CAM on 48,000 square feet and about $10k a month on electricity---alone.
Going to the movie is still the cheapest form of entertainment (outside the home and excluding going to a park) and at $10/2+ hours in air conditioning, a good value. Bowling is close, but not for everyone.
There is still a two year window to navigate through, while the surviving chains cut their losses, but concession prices are maxed out and there is only a little bit of room left for raising ticket prices. Trust me, until then, Theatre Chains aren't the most attractive businesses to invest in.
As far as Digital Projection in the near future? Probably won't see it anytime too soon because at $100k/screen, the chains just don't have the cash.
Take care, Chris
Follow Ups:
Chris, Thanks for your insights.Slightly off the thread topic -- Roger Ebert of the Chicago Sun Times always points out in his columns that movie theaters make their money on the concession stands, not ticket sales (since much of that goes back to the studios). Since you work in the industry, I am curious how true Ebert's comments are.
roughly 75% of AMC's profits, when we were making a profit a few years back, came from the stand. So buy those Twizzlers and Large PC/Sodas, LOL.Chains rent the films from Hollywood and when all is said and done, at least for AMC, film rent would be anywhere from 50%-52% of our ticket sales. Depending on terms, something like Titanic, which took off slowly might tip in favor of the exhibitor after the run. Many terms are 90-10 or 80-20 (in favor of the studios) for the first two weeks (or so) of the film's run. Yikes! However, Sony wanted 80% of the gross for Godzilla, which was a one week wonder. We got it down from 80%, but it was sending a bad message.
Many theatres don't get to do Day and Date in order for the film companies to control things. If the customer could go to his favorite theatre and see a film (as opposed to having to drive across town,) the exhibitors could then dictate terms to Hollywood. For a company like AMC, who really does a nice job of catering to the customer, we want to go up against the Regals and GCCs of the world. It's almost a monopoly for the film companies.
Gotta run, Chris
How much does the theater know about the films they're offered? Does whoever makes the booking decisions get to see it first or do they have to decide based on just a trailer? I vaguelly recall reading in my youth that my then home state of Virginia had an odd law that required theaters to bid blind on movies without even knowing the title. I'm curious because it seems that anyone who picked movies for a living could look at certain movies and say "this might open big but its so awful that word of mouth will kill it after a week and we'll never run it long enough to get to a favorable percentage of the gate."
or something like that.We have a film department in LA that schmoozes with Hollywood and they, at times, get to screen the movies first. Not always, but I would imagine a good portion of films are being seen by somebody in that department. Predictions are made and our guys/gals are pretty damn good. You might have 10 movies one week with a predicted gross of 63 million and on Friday night, when the preliminary box office take gets sent out to individual theatres (for adjustments,) we'd be within a few mil.. One slice of the pie might be slightly bigger/smaller, but the pie would look like a full pie.
Since we get our bookings Monday/Tuesday, we need some idea on how to place that particular film. I had four theatres with 315 seats, then one with 186 and five with 177. The other six were smaller. Knowing how a film is going to play at any given theatre will help save having to move it (and others) during Friday night's shows.
My last two theatres catered to mostly black audiences, so I grossed quite well with pictures like Rush Hour Two, Nutty Professor and Big Mamma's House. Naturally, the film dept. would load me up.
Generally, a film company will have "X" amount of prints to divey up over the entire country. AMC might get 250 prints to spread out over its 180 theatres, Regal gets theirs, GCC their share and so on. Our film dept. will then place the films across our territory in hopes of getting the most money. Obvioulsy, the MegaPlexes are getting 3, 4, and 5 prints, so the multis will get less. I got three prints as a max, of a popular film. I got two of Pearl Harbor, but three of Lord of The Rings. I can always sync. my larger houses, so with one print, I can play two theatres at the same time. We have triple synced before, but the potential for a brain wrap is quite high and then you have a lot of pissed off customers. The best thing to do in this case is just sell it out.
The one bummer for theatres is that there's an exclusionary rule of like 3 miles. So if you and I have our theatres two miles apart, Star Wars II is probably only going to be given to one of us, with the next Fox film going to the loser. Nice theatres want to play day and date, so the customer will choose the better theatre to give her money to. Now, as it stands, that customer has to possibly drive by the better theatre, to see the film across town in a theatre that they might not prefer.
As for your wondering about 'buying films blind,' this might have been so in the distant past, but not recently.
Chris
nt
I strongly agree.When they get the encryption down to pair down the costs of distribution...it's bye bye to alot of the small to mid-range theatre chains.
it's no fun scratching a print on the first few shows. Sucks big time, LOL. I guess having the Hard Drive freeze up won't be any better?Chris
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